GoPro’s Poor Performance Affects Ambarella Earnings

GoPro and Ambarella have close ties as the former depends on the later for a key chip for their camera. As a result, both continue to affect each other in their poor stock market performance.

Investors compare the performance of GoPro and Ambarella as these two companies are connected. Ambarella provides key chip for the action camera giant. So, if Ambarella stocks suffer, then we can expect a similar trend in the case of GoPro as well. On Friday, both faced a not so favorable scenario in the market.

As stated before, the performance of the stocks of these companies are is interdependent. We witnessed a disappointing sales scenario for GoPro as they faced a 5% fall. Ambarella followed suite with a 1.6 % fall, indicating the unavoidable connection.

Ambarella

Ambarella CEO had something to say about this new development. He talked about the company’s performance in the third quarter. He added that the company witnessed strong sales in the 3rd quarter. They saw exceptional results in new markets, IP security camera, dash camera market etc. Home monitoring camera and flying camera markets also helped the company to enjoy a good performance in the 3rd quarter. He also added that the 3rd quarter sales have surpassed their forecasts.

However, the company faced trouble with their wearable sports camera market. What went wrong there? High inventory levels are said to be the main problem in that market. But Ambarella has other things to look forward to including drones as they have been doing really well there.

Now coming to GoPro, things are little different. Ambarella’s sales figures have definitely impacted GoPro in many ways. An important holiday season has upon both these companies and the recent events added to the concerns of GoPro.

GoPro has witnessed a sharp fall in their stock this year as they witnessed close to 70% fall. If we are talking about the market capital, then we can say that the company has lost more than $5 billion.

So much so that the company witnessed the status of their performance going from “outperform” to “neutral”. Those who were responsible for giving the rating noted that the camera sales didn’t witness a pickup at all for the company in the 3rd quarter and they were going for a target of $18.

Despite times bring desperate measures and the company resorted to immediate price reduction to deal with the crisis. This is the second price cut so far as they had done the same in September as well. Back then they went for $100 reduction and this time also they have gone for similar reduction. We have Witnessed Huge Sales on Cyber Monday and Christmas sales are just around the corner.

What lies ahead for GoPro?

Well, the company is not going down if that’s what you want to know. The company still enjoys the same position. They are still a dominant player. It holds especially true in the case of markets that are fast growing. If we take the example of the US, we can see that the company dominates 94% of the market. As you know, US is a huge and important market that witnesses fast growth. If we take the case of US we can see that it grows at the rate of 40% at the moment per year. So, the company doesn’t have to worry too much. After all, we are talking about a $630 million market! Of course they continue to face struggles like this once in a while, but they continue to be a leading force in many fast growing markets and that should energize the company to do the right thing.